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In a lengthy new conversation, National Association of Realtors President Kevin Sears called out the Department of Justice as “disrespectful,” and said his organization settled antitrust commission litigation in order to avoid leaving other industry players high and dry.
Sears made the comments during an episode of Anthony Lamacchia’s podcast, Crush It In Real Estate, that went live Thursday. Speaking to Lamacchia, Sears explained that NAR was engaged in settlement talks before, during and after last year’s trial in the Sitzer | Burnett case — a trial that ultimately ended with a jury verdict against the trade organization and major franchisors. Sears thought NAR was close to a deal on multiple occasions, he said during the podcast, but each time “the goal line kept getting moved.”
In the wake of the verdict, NAR had a few options. One was to appeal, but Sears said that in “order to file an appeal we would’ve had to declare bankruptcy” because NAR didn’t have sufficient cash — $1.8 billion — to post a bond in the case. Bankruptcy would have protected NAR from the verdict and from copycat cases during litigation, Sears said, adding that he believes the organization could have won an appeal.
“But those copycat cases would’ve slowly churned through the court system,” Sears added. “So that agents, brokers, associations, MLSs that were all named in there would’ve been paying millions and millions of dollars in defense costs.”
Sears said appealing and declaring bankruptcy also would have limited NAR’s ability to conduct advocacy work in Washington, D.C.
For all of those reasons, the option was a “nonstarter” in his mind. Hence, the settlement.
Anthony Lamacchia, left, and Kevin Sears on a new episode of Crush It In Real Estate. Credit: Crush It In Real Estate
Still, Sears admitted to not being fully satisfied with the deal. Among other things, he lamented that larger brokerages with more than $2 billion in sales were left out — an outcome that has meant some brokerage leaders “rightfully so are pretty upset with us.”
“I’m a family man; I feel like we left some of the family out,” Sears said, adding that the plaintiffs refused to include the larger brokerages in the NAR deal. “That was one of the times that the goal line got moved, when they popped that one on us.”
More recently, Sears has received emails from people asking how he can be happy that the settlement — which NAR announced in March — just received final approval.
“It’s not that I’m happy, but we fought for the settlement, we fought to get it approved, we will fight to keep it on appeal, because that way it can be in our rearview mirror,” Sears said. “We couldn’t focus on the future, we couldn’t focus on what’s in front of us, if that was still hanging over our head.”
Later in the conversation, speaking of the entire situation, Sears said simply that “it sucked.”
Sears also discussed the Department of Justice’s scrutiny of NAR. The DOJ is currently fighting to reopen an investigation into NAR and has been a presence looming in the background of recent years’ commission litigation.
Last week, the DOJ additionally filed a statement of interest in the Sitzer | Burnett case two days before NAR’s landmark settlement in the case received final approval.
Sears condemned the filing.
“What the Department of Justice did last week was very disrespectful,” he said.
Among other things, the DOJ’s statement of interest balked at rules requiring buyers and brokers to enter into written agreements before touring homes — one of the key practice changes that took effect in August as part of the antitrust settlement. But Sears said that particular issue hadn’t previously been a point of contention for the DOJ.
“When we met with them in June, they never once talked about that being a bad thing,” Sears said. “They never once said they have an issue with a written agreement with the buyer.”
Sears additionally said that during a meeting, one of the DOJ attorneys referred to NAR “using a word that you and I would use when we talk about murderers, human traffickers, or drug traffickers.”
“So disrespectful,” he added.
Lamacchia later asked what might happen next year, when Donald Trump takes office and gets the opportunity to appoint new leadership over the DOJ.
“I don’t think the Department of Justice is necessarily going away,” Sears replied, “but I think that things will be a little bit different.”
Sears explained that he believes some attorneys in the DOJ may stick around, but either way, he added that he is willing to work with the agency.
“If we can negotiate some peace,” Sears said, “then that’s what I want to do.”
Watch the full episode of Crush It In Real Estate here:
